Our approach to governance

At Afrox, we are accountable for our actions and strive to be transparent in all decisions and activities.

Our business is uniquely South African, and we consider its diverse aspects while managing our business in accordance with The Linde Group global best practice, encompassing business processes, management, technology, environment, employment, relations with suppliers, customers and society.

Our integrated thinking and application of good corporate governance is embedded in our organisational culture and is exhibited in the manner in which the Company oversight safetis provided. Specifically through governance principles and policies that are integrated into our operations and reviewed frequently to ensure continuous compliance and application of best practice. A robust governance structure is in place, including the presence of a lead independent non-executive director.

King III supports the inclusion of sound leadership practices, such as sustainability and good corporate citizenship, in our business structures, policies and practices. Some of our governance activities are already aligned with the King IV™ Code of Corporate Governance for South Africa, and we are making progress in applying these principles further to achieve full compliance in the next year.

Afrox governance structure

Board of directors

Independent

Dr Khotso Mokhele (61)

Lead independent director

Khotso was appointed to the Afrox Board in December 2005.

He was on the teaching and research staff of the Universities of Fort Hare and Cape Town between 1986 and 1992. He was vice-president and then President of the Foundation for Research and Development from 1992 to 1999, and president of the National Research Foundation from 1999 to 2006. He served on the Council for Higher Education, the National Advisory Council on Innovation, and the National Skills Authority. Khotso was the founder and president of the Academy of Science of South Africa.

Khotso holds eight honorary doctorates from South African higher education institutions and one honorary doctorate from Rutgers University in New Jersey (USA). He currently serves as special advisor to the Minister of Science and Technology. He is the chairman of two South African-listed companies (Tiger Brands Limited and AECI Limited). Khotso chairs the SET and SHEQ committees at Afrox and is a member of the NGMR Committee.

Chris Wells (68)

Independent non-executive director

Chris was appointed to the Afrox Board in November 2012.

Chris is Chief Executive Officer of Oakbrook Holdings (Pty) Ltd, a private investment company and chief executive officer of International Facilities Services (Pty) Ltd, a company focused on providing facilities services in sub-Saharan Africa. He is a non-executive director of the Spar Group Limited where he chairs the audit committee and risk committee and is a member of its social, ethics and transformation committee. He has extensive experience in the retail and manufacturing sectors, having been both a CFO and CEO of various listed companies. He is a Chartered Accountant (SA). Chris chairs the Audit Committee.

Nomfundo Qangule (49)

Independent non-executive director

Nomfundo was appointed to the Afrox Board in July 2014.

She was the chief financial officer of Harmony Gold Limited between 2004 and 2007. She is currently director of Hans Merensky Holdings, Afrocentric Health Limited, Rebosis Limited, and Nozala Investments (Pty) Ltd. She is both a CA(SA) and CAIB(SA).Nomfundo is a member of the Audit and SET committees.

Lean Strauss (58)

Independent non-executive director

Chris was appointed to the Afrox Board in November 2012.

Lean was appointed to the Afrox Board in May 2015. He joined Sasol in 1982. He spent most of his career with Sasol Oil, where he held the positions of general manager, manufacturing and supply as well as general manager, marketing. He was appointed as general manager of Sasol Gas in 1997 and managing director of Sasol Nitro in 2002. In 2005 Lean was appointed as a member of the group executive committee and as group general manager responsible for Sasol’s international energy portfolio. From January 2010 he took over the group’s responsibility for Sasol Oil and Sasol Gas. In July 2010 he was promoted to senior group executive, responsible for the Group’s total growth portfolio, Sasol’s international energy cluster, Sasol new energy and Sasol technology. He was also a director and chairman of several companies in the Sasol group. Lean has a BCom and BCom Honours Degree from the University of Stellenbosch and an MCom Business Management Degree from the Rand Afrikaans University (now University of Johannesburg). Lean chairs the NGMR Committee and is a member of the Audit and SHEQ committees.

Nolitha Fakude (52)

Independent non-executive director

Nolitha was appointed to the Afrox Board in March 2017 and bolsters our team with 25 years of experience across multiple organisations and diverse industries.

Nolitha held a number of senior positions prior to joining Afrox, including executive director at Sasol, chairperson of Sasol Mining, non-executive director for Harmony Gold, director and group executive member at Nedbank Limited as well as managing director at the Black Management Forum.

In April 2017, she will join the board of Anglo American Plc and previously served as a non-executive director on the boards of Datacentrix Holdings and Woolworths.

Nolitha holds a Bachelor of Arts Degree from the Walter Sisulu University and a BA Honours Degree, from the University of Fort Hare.

Non-independent directors

Sue Graham Johnston (47)

Chairperson

Sue was appointed as Chairperson of Afrox’s Board of directors.

She succeeds head of EMEA Bernd Eulitz, who was appointed to the Board on 1 June 2015. She assumed her role as Chairperson on 7 September 2016.

Sue joined The Linde Group in April 2015 after nearly two decades in the technology sector during which she held various executive positions at Oracle, most recently as vice-president business strategy and product operations for their telecommunications global business unit.

Prior to Oracle, Sue worked for Sun Microsystems, holding vice-president and director roles in new product introduction, grid solutions, quality, engineering and supply chain management. She was also a management consultant at Bain & Company in San Francisco and Hong Kong.

She holds degrees in mechanical engineering and product design, and a Master’s Degree in Manufacturing Systems.

Richard Gearing (54)

Non-executive director

Richard was appointed to the Afrox Board in August 2012.

He is the head of MPG operations at BOC UK, a subsidiary of The Linde Group. He joined BOC in 1985 and held various senior positions in the industrial and packaged gases business, including business director industrial, general manager north, customer services manager north and distribution manager. He holds a BSc in Engineering Mathematics from Bristol University. He is a member of the SHEQ Committee.

Matthias von Plotho (47)

Non-executive director

Matthias was appointed to the Afrox Board in May 2011.

He is The Linde Group’s head of finance for EMEA. He joined The Linde Group in 2001 and was responsible for implementation of IFRS for financial instruments. Since then he has held a number of senior posts, including head of mergers and acquisitions. Prior to joining The Linde Group, he worked with KPMG and AGIV AG in Germany. He holds a Master’s Degree in Business Administration from the University of Würzburg, Germany. Matthias attends Audit Committee meetings by invitation.

Our highest decision-making authority rests with the executive directors who take responsibility for business oversight and governance based on sound governance practices that promote profitable sustainability for us and our stakeholders.

Executive directors

Schalk Venter (50)

Managing Director

Schalk was appointed to the Afrox Board on 18 May 2015 and assumed the role of Managing Director.

He joined Chemserve Systems in 1991 as a junior sales representative and went on to serve as managing director of a number of subsidiaries of the group before he was promoted to chemical services executive and joined the board in 2006.

Thereafter, he was appointed chairman of a number of subsidiaries, including Nulandis, Resinkem, Duco Speciality Coatings and Chemfit. In 2010, he was promoted to executive for AECI and in 2012 he was promoted to managing director of AECI’s biggest subsidiary, AEL Mining Services.

Schalk has a Higher National Diploma in Analytical Chemistry from Tshwane University of Technology and attended the Advanced Management Programme 107 at INSEAD Business School.

Dorian Devers (41)

Financial Director

Dorian was appointed to the Afrox Board on 28 May 2015 and assumed the role of Financial Director.

He is currently the Region Africa and United Kingdom financial director for The Linde Group AG, the holding company of Afrox. Dorian joined BOC in 1997 and has held a number of senior posts since.

Dorian has significant corporate finance experience having successfully concluded various merger and acquisition opportunities as well as supporting the development of major projects across multiple sectors and geographies.

He has experience in the LPG industry, having been the chief financial officer for Elgas the largest LPG company in Australia and New Zealand.

Dorian took up his current role of Finance Director for Linde’s region Africa UK and Ireland in 2013.

He holds a BSc Honours in Mathematics and Physics from the University of Manchester.

Refer to www.afrox.co.za for the curricula vitae of our executive management members.

Effective control is maintained through a well-developed governance framework that provides for delegation of authority and applicable duties. The Board delegates authority to relevant Board Committees and individuals with clearly defined mandates that are reviewed annually. These Committees discharge Board responsibilities and provide in-depth focus on specific areas according to their relevant skills and expertise.

The Board delegates authority to the executive directors to manage the business and affairs of Afrox. Our executive management assists the Managing Director, subject to statutory parameters and the Board’s limits on the delegation of authority to the Managing Director. Delegated authorities are monitored and reviewed on an annual basis.

Our combined assurance model

Our approach to assurance includes three lines of defence:

Board charter

Business conduct is regulated by means of a King III-aligned Board charter that is underpinned by principles of sound corporate governance. The Board charter is currently being revised to ensure alignment with better practice and provide further guidelines for responsibility. This revision is done annually and considers changes brought about by new legislation or the business environment.

Chairperson and Managing Director

The Chairperson is an executive of the controlling shareholder, The Linde Group, and the Chief Executive of Region Africa and the UK. The Chairperson provides overall leadership of the Board and its committees. She monitors and evaluates the performance of the Managing Director in conjunction with the NGMR Committee in order to ensure the achievement of Afrox’s strategic and operational objectives. Dr Khotso Mokhele is the lead independent director, as the Chairperson is not independent.

The Board recognises that the roles of the Chairperson and the Managing Director should be separate to ensure a balance of power and authority, and applies this to ensure decision making is unfettered or polarised. The new Chairperson was appointed on 7 September 2016. Refer here for the compliance statement.

Board focus areas

After a challenging year with an increased workload as a result of oversight on the post-restructure governance, risk mitigations and business controls, the refreshed Board is set to take our business forward with a dynamic mix of expertise and talent that has proved invaluable in problem solving and oversight.

2016 focus areas

Tracked the benefits in financial results from the restructure.

Managed cost creep and accountability

Implemented a sales incentive scheme to enhance the performance of sales and marketing

BBBEE performance and transformation

­Safety drivers

Competition Commission market inquiry

The Board approved gender targets of 25% for women in respect of Board representation

In 2017, the Board aims to:

Introduce a new risk management system to review the external environment for risks, opportunities and benefits. Thereafter, to apply these to our organisational culture from the employees up towards the Board to build a deeper understanding of sustainability.

Review internal and external security and compliance risks.

Enhance the efficiency of dedicated consults.

Monitor financial performance and cost recovery.

Build on our competitive advantages.

Review sales and marketing performance.

Drive the right culture and behaviours.

Competition Commission market inquiry feedback

The Competition Commission market inquiry into the LPG sector is ongoing. Afrox continues to provide information upon request as well as supporting information to the inquiry. Refer here for further details.

Board composition and skills

Average non-executive board member age is 53.6 years compared to 57.2 years – SA Board index1.

Board meetings and attendance

Afrox held four Board meetings. Ad hoc meetings are arranged as required. During 2016, there were four regular and no special meetings.

The agenda and relevant supporting documents are distributed to directors before each Board meeting. If directors are unable to attend Board meetings, they submit comments on the agenda and general items to the committee chairperson for raising and discussion.
Directors based abroad have access to video or teleconferencing facilities for participation. During the meeting, the appropriate executive director explains and motivates business items that require decisions. Unrestricted access to all Company information and records is available to all directors.

Board appointments, training and evaluation

Rotation of directors and independence

Director rotations took place as per the Company’s notice of annual general meeting (AGM). Sue Graham Johnston was appointed to the position of Chairperson of Afrox’s Board of directors, succeeding head of EMEA, Bernd Eulitz, who was appointed to the Board on 1 June 2015. Ms Graham Johnston took up her role on 7 September 2016.

Dr Mokhele has been a lead independent director for more than 10 years. The Board has collectively discussed the character, material interests and performance of Dr Mokhele, and is comfortable that he remains a highly effective and independent member of the board.

Selection process and support

The NGMR Committee makes recommendations to the Board on executive and non-executive director appointments as well as Board composition. The Board considers the recommendations and makes appointments as it deems appropriate, subject to shareholder approval at the ensuing AGM.

Afrox uses skills, acumen, experience and actual or potential level of contributions as criteria for appointments. We further review possible impacts on Afrox’s activities and racial and gender diversity. The Afrox Board approved a 25% female diversity representation target in 2016 in compliance with section 3.84 of the JSE Listings Requirements .We achieved this target by having three female directors on the Board.

All directors have access to information required to enable them to carry out their duties. They also have access to management and the Company Secretary in order to carry out their responsibilities fully and effectively.

Training and evaluations

Board members received external training on the Competition Act in September 2016, specifically on director’s responsibilities and liabilities in fulfilment of their fiduciary duties.

All new Board members go through a detailed Board induction process and occasional site visits aid employee engagement while providing site-specific information for member edification. The next site visit will occur in May 2017.

External Board evaluations are performed once every three years and are dynamic, based on business circumstances. The next external evaluation will take place in 2019.

Internal Board evaluations for the periods 2015 and 2016 were completed in February 2017. The overall outcome demonstrated that the Board and the committees are functioning effectively with constructive and positive relationships being formed between board members and management. The process identified areas of enhancement which included organisational succession planning, bolstering of the risk management function and formalising stakeholder engagements. The Board Chairperson and the respective committee chairs will put action plans in place to address these areas and evaluate the progress made at the next board appraisal. The Board will also conduct an external skills gap analysis to ensure a balanced mix of skills going forward.

Company Secretary

Cheryl Singh was appointed Company Secretary in January 2014. The Company Secretary is not a member of the Board or a prescribed officer. The Afrox Board remains satisfied that an arm’s-length relationship exists between it and the Company Secretary.

The Company Secretary provides the Board with guidance in discharging of directors’ duties and responsibilities in the context of legislation, regulation, governance procedures and requirements. The Board has access to, and is aware of, the responsibilities and duties of the Company Secretary and has committed itself to ensuring that the Company Secretary is afforded support as and when required. The Company Secretary acts as secretary to all Board-appointed committees.

In line with the JSE Listings Requirements, the Board assessed the Company Secretary on the basis of competence, qualifications and experience. The Board concluded that the Company Secretary is competent to carry out her duties and remains responsible for the appointment and removal of the Afrox Company Secretary.

Board-appointed committees

The Board delegates certain management responsibilities to Board‑appointed committees to assist in discharging its duties while remaining accountable for the performance and affairs of Afrox.

Each committee acts within agreed, written terms of reference. The Board receives minutes of committee meetings and reports from the Chairperson of each Board-appointed committee at the scheduled Board meetings.

The Chairperson of each Board-appointed committee is an independent non-executive director and members are non-executive directors. The only exceptions are the SHEQ and SET committees, where the Managing Director is an official member. Executive directors attend committee meetings by invitation.

The Audit Committee report for the year ended 31 December 2016 is included in the annual financial statements. The SET Committee report is available here.